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Federal Register / Vol. 86, No. 110 / Thursday, June 10, 2021 / Rules and Regulations
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The 2020 Proposed Rule and PCNC
HUD published a proposed rule in January 2020, 85 FR 2014 January 14, 2020, to repeal and replace the 2015
AFFH rule. However, on August 7, 2020, at 85 FR 47899, HUD abandoned that proposed rulemaking and instead promulgated the PCNC final rule, which not only repealed the 2015 AFFH rule, but eliminated the regulatory framework that preexisted that rule. It thus left program participants without any obligation to undertake any type of fair housing planning whether an AFH, an AI, or any other and leaving HUD
without any mechanism to assist jurisdictions that wished to continue such activity. As described below, and of particular relevance to this rulemaking, the PCNC rule also redefined the AFFH obligation to which funding recipients must certify, without reconciling the new definition with the statutory requirement and judicial precedent.
HUD promulgated PCNC without following notice-and-comment rulemaking procedures deciding that the PCNC rule was exempt from the Administrative Procedure Act APAs notice and comment requirement because the regulation applies only to the AFFH obligation of grantees. The APA exempts from notice-and-comment rulemaking any matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. 5 U.S.C. 553a2.
However, as PCNC acknowledged, HUDs rule on rules at 24 CFR part 10
requires HUD generally to follow the APA notice-and-comment rulemaking procedures notwithstanding any statutory exception that might otherwise apply, such as the grantmaking exception. HUD instead relied upon the Secretarys general regulatory waiver authority at 24 CFR 5.110 and codified at 42 U.S.C. 3535q to waive any regulatory requirement upon determination of good cause. As justification, the preamble to the PCNC
rule stated that AFFH has been the subject of significant debate and public comment over the course of many years and this rule will ensure that program participants have the timely clarity they need concerning their legal obligations as grantees. 85 FR 47901. In the waiver notice accompanying the PCNC
regulation, HUD asserted that in light of this public engagement, continued notice and comment concerning AFFH
is unnecessary and would simply be a legal formality without adding
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substance to the debate. 8 The waiver did not acknowledge that, while other issues related to the AFFH requirement had been the subject of notice and public comment, the definition of AFFH
that appears in the PCNC rule had never been published for public comment.
Notwithstanding this lack of prior notice and comment, the PCNC rule withdrew the 2015 rules definition of the AFFH obligation and replaced it with a novel definition that HUD now finds was not a reasonable interpretation of the statutory mandate.
The PCNC rule acknowledged that, under any reasonable reading of the AFFH requirement, compliance requires more than simply not discriminating, and grantees are required to actually promote fair housing. 85 FR 47902. Nevertheless, the rule went on to define fair housing as housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible as required under civil rights laws. 85 FR 47905. The rule thus redefined fair housing to include attributes such as safe and decent that, while laudable and consistent with HUDs mission, are legally distinct from the requirements of the Fair Housing Acts AFFH obligation. It then revised the regulatory definition of affirmatively further to mean to take any action rationally related to promoting any attribute or attributes of fair housing . . . Id. emphasis added.
Finally, the PCNC rule provided that a program participants certification of compliance with this statutory duty would be deemed sufficient if the participant took, during the relevant period, any action that is rationally related to promoting one or more attributes of fair housing. . . , using the definition of fair housing described above. 85 FR 47906.
Thus, under the PCNC rule, a program participants certification of compliance with the AFFH obligation amounted to a certification that the program participant would take any action rationally related to promoting one or more of the following attributes:
Housing that is affordable, safe, decent, free of unlawful discrimination, or accessible as required under civil rights laws. This certification requirement can be satisfied with minimal or no action not already required by other non-civil rights statutes and HUD rules, and without doing anything to remedy fair 8 Partial Waiver of 24 CFR 10.1 Notice-andComment Requirement July 23, 2020, https
www.hud.gov/sites/dfiles/ENF/documents/6228-F01%20PCNC%20-%20SIGNED%20Waiver%20%207.23.20.11.42.pdf.

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housing issues. For example, a jurisdiction taking any steps to meet HUDs programmatic requirements for maintaining the physical condition of federally supported housing, such as ensuring that fire exits are not blocked, smoke detectors are in good working order, or lighting is adequate, could certify compliance under the PCNC rule, despite taking no steps to stop discrimination that violates the Fair Housing Act, let alone any proactive steps of the kind the AFFH statutory mandate requires. Put simply, the PCNC
rule made a participants certification insufficient to ensure compliance with the AFFH obligation.
HUD thus finds that the PCNC rule did not interpret the AFFH mandate in a manner consistent with statutory requirements, HUDs prior interpretations, or judicial precedent.
Nor did it provide sufficient justification for this substantial departure. Rather than attempting to reconcile its definition with these precedents, the PCNC rule dismissed them as mistaken in conclusory fashion.
85 FR 47902.
Through this rule, HUD is repealing the PCNC rule and publishing this interim final rule to reinstate the relevant definitions that were promulgated pursuant to the APAs notice and comment requirements in HUDs 2015 AFFH rule, as well as appropriate certifications that incorporate these definitions, effective on July 31, 2021. This interim final rule thus reinstates the regulatory requirement, consistent with the statutory mandate, agency interpretations, and judicial precedent, that program participants certify that they take meaningful actions that, taken together, address significant disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially or ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws.
Program participants have long been accustomed to certifying compliance with this substantive standard and comparable procedural requirements such as completion of the AI process.
Additionally, while this interim final rule does not require program participants to undertake any specific type of fair housing planning to support their certifications, it provides notice that HUD will once again offer technical support and other assistance for jurisdictions that wish to undertake AFHs, AIs, or other forms of fair housing planning.

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